Urban Exposure shares dip as it expects 'significantly lower' income

The firm intends to assign its loan book off-balance sheet into the asset management business, which will hurt short-term earnings

Shares have fallen below the placing price of the IPO

Urban Exposure PLC (LON:UEX), the housing development finance firm that made its debut on AIM in May, said it expects “significantly reduced income in the short term”, sending its shares lower on Friday.

Since the initial public offering, the group said it has experienced strong demand from developers for finance.

But the company said it intends to assign its loan book off-balance sheet into the asset management business, which will have a negative impact on short-term earnings.

“However the company believes that the benefit of doing this will lead to greater earnings potential via a larger asset management business and will also free up capital to redeploy in further loans for the remainder of 2018 and into 2019," it said.

Higher quality loans with developers have also resulted in slower drawdowns, the firm added.

Urban Exposure is working on a number of new loans with aggregate potential commitments worth more than £300mln, which it expects to close by year-end. It expects to have closed loans totalling £530mln by the end of 2018.

The group made a strong debut on AIM in May after raising £150mln at a placing price of 100p per share, giving the company an initial market capitalisation of £165mln.

"This has been another successful year in which the group has achieved a 25% uplift in NAV, significant lettings successes across recently completed developments leading to a 21.49% increase in contracted rent and a strong performance across our key metrics," said the CEO, John Arnold.

We are an award-winning residential development finance provider. Urban Exposure was established in 2002 and evolved into a development finance provider in 2009.

We provide development funding for residential, mixed use, student accommodation, retirement living and PRS schemes. We use our in-house development and lending expertise in all phases of the lending process including origination, underwriting, loan servicing and development monitoring. In addition we provide comprehensive asset management services to other debt providers.

We are focused on aligning ourselves with government initiatives to increase housing supply, particularly in the affordable segments of the market where the units are targeting domestic buyers. We are also committed to increasing the availability of finance to smaller developers who we believe can significantly contribute to addressing the UK’s housing shortage. We actively engage in public policy work and consultation as a non-bank lender, to proactively look at meaningful solutions to increasing housing supply.

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